Healthcare Market Outlook Stays Strong with Slight Downturn

By HCO Staff

NEWTON, Mass. – Proposal activity for Healthcare Facilities remained solid in the third quarter of 2019, suggesting a continuing pipeline of design and construction project opportunities heading into 2020. The sector bears watching however, as the overall market and the four submarkets measured in the survey of architecture and engineering firms were all down from the previous quarter.

The results are from a survey of approximately 200 companies conducted by PSMJ Resources, a consulting and publishing firm dedicated to serving the architecture, engineering and construction (A/E/C) industry. Of the 12 major markets measured in PSMJ’s Quarterly Market Forecast (QMF), Healthcare was the second-strongest with a Net Plus/Minus Index (NPMI) of 46%. It trailed only Transportation (49%) in the quarterly survey.

Despite the positive results, the NPMI for Healthcare dropped below 50% for the first time since the third quarter of 2018. PSMJ’s NPMI measures the difference between the percentage of firms reporting an increase in proposal activity and those reporting a decrease.

For all Healthcare facilities, only 6.2% of respondents said that proposal activity declined, compared with 52.6% that saw an increase. Proposal activity in Healthcare for the remaining participants was relatively unchanged, quarter to quarter.

In another potential area of concern for the Healthcare market, all four of the submarkets measured in the QMF fell in the third quarter. Continuing Care Facilities, including treatment centers and nursing homes, fell to its lowest level in seven years with an NPMI of 47%. This ended a streak of 23 consecutive quarters in which the CCF submarket scored an NPMI of 50% or higher, and followed a second quarter in which it topped all 58 survey submarkets with an NPMI of 70%.

Medical Offices was the second-best Healthcare submarket with an NPMI of 40%, its lowest mark in nearly three years. Results for Hospitals and Medical Laboratories also dipped in the third quarter, both coming in with an NPMI of 18%.

PSMJ Resources, Inc., based in Newton, is a publishing, executive education, and advisory company dedicated to serving A/E/C organizations worldwide. Its QMF draws responses from 200-300 A/E/C professionals each quarter. PSMJ chose proposal activity to gauge the industry’s long-term outlook because it is the earliest stage of the project lifecycle.